This blog will share the information on Nestle franchise in India (Nescafe Franchise & Maggi Franchise) such as
- Different franchise models
- Points to consider before taking this franchise
- Application process
All this information will enable you to decide whether this franchise business opportunity is suitable for you or not.
Table of Contents
Nestle is Switzerland-based world’s largest food company.
The company that we know as Nestle today was founded in 1905, but its history is from 1866.
Today Nestle is present in 189 countries of the world.
Nestle arrived in India in 1959.
Nestle’s annual turnover in 2020 is little more than twelve thousand crore rupees.
Nestle’s products are very popular in India. Undoubtedly, most of us would have consumed at least one of its products at some point in time. Some popular products of Nestle are Cerelac, Milkmaid, KitKat, Nestea, Nescafé, and Maggi. Of all these products, Nescafe and Maggi are so popular that Nescafe is synonymous with instant coffee, and Maggi is synonymous with instant noodles. It is a fact that only a few brands achieve such popularity.
So what does a company do when it has such popular brands? That company then does the brand extension, which means introducing more products/services under those brands. And this is what Nestle has also done by launching its franchise business under Nescafe and Maggi brand.
Why Nestle Started Franchising?
The fundamental question that arises here is why the retail market’s big daddy, i.e., Nestle, entered into franchising? We must understand the rationale behind a business move because a business move or business model is successful only when it solves a problem.
Though the company says through Nestle franchise, it intends to provide
(i) Self-employment opportunities to the people.
(ii) An option for those who want to take a quick bite at a hygienic place that serves tasty food.
But it is only the packaging to market their franchise model. Hence, we need to understand what issues these Nestle franchise models would solve for the company. According to my analysis, there are three problems that the Nestle franchise model would solve, and they are as follows.
Reclaim the Lost Market:
At one point in time, Nestle’s Nescafe brand was powerful in offices, corporates, and institutions because of its coffee dispensing machine. Subsequently, many other players also jumped in the coffee vending machine business, and Nestle started to lose its market share. In the last few years, a significant change took place in the form of a tea dispensing machine. On the whole, tea is the preferred beverage in India over coffee. Hence, keeping in mind the employees’ preference, various corporates and companies started to replace coffee dispensing machines with tea dispensing machines. As a result, the market in which Nescafe enjoyed near-monopoly at one point in time had slipped from its grip. Hence it is not surprising that Nestle wants to capture its lost market share through these franchise models.
To Become a Prominent Player in the New Business Segment:
In the last few years, the appearance of canteen in offices, corporate parks, universities, colleges, and hospitals have changed beyond recognition. At this time, an unknown contractor does not manage many of these canteens. Alternately, some well-known food and beverage brands run these canteens. Unfortunately, Nestle does not have any presence in this market. Hence through these franchise models, Nestle wants to make its way into this segment.
Reach Directly to Customers
A couple more things happened in the last few years. First is the rise of cafe brands like CCD and Barista. These brands sourced their coffee directly from the producers. Thus Nestle’s Nescafe and Nestea found themselves left out from serving the customer. Additionally, Maggi has become quite popular as street food. Many roadside stalls, cafes, and restaurants have Maggi on their menu.
As Nestle makes Nescafe & Maggi, it is a very logical option to sell these products to customers directly. Additionally, the company can sell other products along with Nescafe and Maggi through its franchising route.
So, in my opinion, these are some of the reasons why Nestle ventured into the franchise business.
Nestle Franchise Models
Nestle has launched four different franchise models in India.
- Nescafé Corner franchise model,
- Maggi Hotspot franchise model,
- Kit Kat Break Zone franchise model and
- a + Milk Booth franchise model
But in this blog, we will discuss only about Nescafé franchise and Maggi franchise. As there is no information about the other two franchise models, Kit Kat Break Zone franchise and a + Milk booth franchise, neither on the company’s website nor in the media. Hence, we will skip them for now.
Requirements for Nestle Franchise Models
The requirements mentioned are for both the Nescafé franchise and Maggi franchise.
Involvement of the franchisee in Nescafe Franchise & Maggi Franchise:
This is a FOFO (franchise owned franchisee operated) model. Hence franchisee’s active participation is required.
Investment in Nescafe Franchise & Maggi Franchise:
According to the company’s website, the investment is between 5–15 lakhs.
Potential investors should note that this investment depends on
(i) The equipment required to make the products (being sold).
(ii) The Nescafe franchise kiosk or Maggi Franchise Kiosk size.
Area Requirement for Nescafe Franchise & Maggi Franchise:
Nescafe franchise and Maggi franchise work very well in a small space.
Usually, both the models of Nestle franchise business require an area from 25sq ft to 125sq ft.
Area requirement depends on the products that a franchisee wishes to sell. If the franchisee wants to sell only tea and coffee, then 25 sq ft is enough for it. Alternatively, if the franchisee wants to sell the entire product range, 125 sq ft of space is required.
The popular kiosk sizes for Nestle franchise are 5*5 sq ft, 8*7sq ft or 12*10 sq ft.
Manpower Requirement in Nescafe Franchise & Maggi Franchise:
In both the Nescafe franchise and the Maggi franchise, the staff requirement is not high. Both kiosk models of Nestle franchise have a workforce requirement of two people. But In some exceptional cases, such as if a kiosk serves only tea coffee, only one person is required. Alternately, if the kiosk model has high footfall, then three persons are needed. But franchisee does not need to worry much about the number of people to recruit. Importantly, Nestle guides about the required manpower at the time of taking the franchise.
Government Approval and Licenses Required to Take the Nestle Franchise:
Every food business requires certain approval and licenses before it begins the operation. Nestle franchise, is no exception. Depending on the city and state, the company’s regional retail managers guide the prospective franchisee on the topic. Without a doubt, one license needed in this case is from FSSAI, which is mandatory for every food and beverages business to procure.
Price of the Products in Nestle Franchise
In both the Nescafé franchise and Maggi franchise, the product’s price has been kept very competitive. All the products here range between 20 – 100 rupees. Furthermore, this price is such that it will not be too heavy on the customers’ pocket.
Locations Suitable to Take Nestle Franchise
Nestle franchise models are present with 500+ kiosks in 80+ cities. The most suitable locations for Maggi franchise and Nescafé franchise models are large offices, corporate parks, universities, colleges, hospitals, and airports. All these places are with high footfalls. Additionally, these places have a high demand for hygienic and branded food options.
Why Would a Customer Prefer Nestle Franchise?
There are many reasons for a customer to visit a Nestle franchise, but some are as follows.
Branded Experience for Customers: If the customers get to eat something they like at a branded place, they would prefer that place over an unbranded one.
Safety and Hygiene: When the customers see how their order gets prepared with safety and hygiene in the open kitchen, their confidence will naturally enhance on that franchise business.
Quick Service: Most of the Nestle franchise products are those that take a short time to prepare. This reduces the waiting time for the customer.
Value for Money: As we saw earlier, Nestle franchise product’s price is between 20 – 100 rupees. As the products are inexpensive, hence student segment can also easily afford them.
Good Product Range: A franchisee gets a good product range to satiate any type of hunger with which a customer comes.
What Food Items Does Nestle Franchise Sell
A Nestle franchisee sells products depending on the franchise model. The majority of the products sold are Nestle’s own products. Only in some cases, Nestle allows its franchisees to sell some bakery products along with its products.
But there is an essential distinction between the Maggi franchise and the Nescafé franchise. The difference is in the form of the variety of the products sold. The focus in the Nescafé franchise is on coffee and tea. As a result, they have more variety of beverages than food products. In contrast, the Maggi franchise has more food options in comparison to the beverages.
Advantages of Nestle Franchise
(1) When a company like Nestle which has such a long history of success behind it makes a business move, they do so after great thought. Moreover, if it moves forward, then it does not back down. Hence it is safe to assume that Nestle would have studied how its franchise models perform in different markets, and then only it would have launched them. Therefore, the company will not discontinue this franchise model in near future.
(2) Nestle is not only India’s but the world’s one of the biggest brands. Thus, an opportunity to associate with such a large brand gives much social recognition.
(3) The Nestle franchise is an exciting opportunity to sell the products like Nescafe and Maggi, which are the leader in their respective categories. Thus selling is not a tedious act.
(4) The low cost of starting and running a famous brand’s franchise business is the most significant advantage. This results in a short break-even period and quick recovery of the investment.
(5) The change in the menu from time to time with the introduction of new products keeps things exciting for the customers.
(6) Nestle allows its franchisees to open multiple kiosks. This opportunity to open various outlets gives the franchisee an excellent chance to grow with the organisation and make money.
Another franchise business opportunity with low setup cost and operational cost is Amul. You can read about it here.
Points to Consider Before Taking Nestle Franchise
(1) Though Nestle gives franchises on various locations, but it is critical to assess them based on the number of footfalls, purchasing power, and the inclination of the customers to consume products. Keeping in mind these parameters, the most preferred locations for anyone would be corporate parks and cafeterias of universities. Followed by large offices and colleges. Lastly, the airports, that too only if rentals make some sense.
(2) Whether to take the Nescafe franchise or Maggi franchise depends on the customer base of a location. For example, in corporate parks, a Nescafe franchise would do well. In contrast, a Maggi Franchise would do well in and around universities.
(3) It is essential to know the margin on all the products before taking the franchise. Information on all the margins helps in calculating the correct return on investment period. There is a tendency among some company executives to share only the average margin; hence, it is critical to ask for product-wise margin specifically in that scenario.
(4) Try to speak with an existing Nestle franchise before taking the final decision. This will give much insight into the functioning of the Nestle franchise business.
How To Apply for Nestle Franchise
After understanding all the aspects of the Nestle franchise business, if one wishes to take the franchise, it has the following two options to go ahead.
(1) Interested person can call and speak on this helpline number 18001034472. The helpline executive will take basic information and will pass those details to the concerned person. That concerned person will contact the interested person at their convenience.
(2) Interested people can fill this application form, which is available on the website too. If the company official finds the application in order, then they would revert.
If you understand Hindi then you can also watch this detailed video on Nestle franchise and its two models, Nescafe franchise and Maggi franchise.
Nestle is one of the most recognised brand in the world. Hence the opportunity to associate with its franchise business deserves a serious consideration. Additionally, the two Nestle franchise models, namely Nescafe Franchise and Maggi Franchise have low setup and operational costs. As a result people with small budgets too can consider to associate with these brands. Without a doubt, This franchise business can be termed as the hidden gem of this year.
This blog is created solely for informational and educational purpose. Ideas and suggestions given in this blog are not substitute for the guidance under the expert. Hence readers are advised to do own due diligence before taking action based on this blog. This blog is not warranted for content accuracy. Reader’s discretion is required on Nestle franchise (Nescafe franchise & Maggi Franchise).